INVESTMENT CHARACTERISTICS
POISED FOR SUCCESS
Breckenridge real estate is once again positioned for continuing success based upon an irreplaceable ski mountain, bountiful snow, a diverse and charming Main Street, friendly easy going people, and some of the best outdoor recreation to be found anywhere on the planet. Demand for our coveted Rocky Mountain lifestyle is on the rise driven by an expanding Front Range metroplex, affluent customers, and population demographics all favoring a long awaited return of the historical growth rate which was temporarily suspended by The Great Recession, and is now just a fading memory. Resort real estate is one of the last remaining property types still priced at near cyclical lows facilitating lifestyle enhancement and diversified portfolio returns. Even though high end luxury good spending may never be the same, data analyses support the assertion that there is still long term pent up demand for “unique best of the best places” based upon the following drivers.
POPULATION DEMOGRAPHICS: Seventy eight million baby boomers, representing one out of every four people in America, are steadily ageing and increasingly interested in travel, leisure, recreation and vacation home ownership. In an older but nevertheless relevant study, American Demographics Magazine surveyed 25,000 households with earnings in excess of $200,000, stating that “vacation homes are a top wish list priority for affluent households” and given the surge of recent activity, we definitely agree with that conclusion.
BRECKENRIDGE Renaissance: The worldwide ski industry which began in the 1960’s has now crossed the 50 year old threshold and like any of us in middle age suffers from failing infrastructures and older improvements. The most desirable locations oftentimes have the most dilapidated and outdated structures, which is out of synch with high net worth customers who demand quality construction, energetic urbanized downtowns, natural settings and low levels of congestion. In terms of reinvigorating their ski villages, Vail Resorts is leading the way as exemplified by their billion dollar commitment to the Peak 7 & 8 base area which is a staggering sum of money and generally without precedence within the industry today. These capital improvements have important value added ramifications, representing an undeniable commitment by the ski company to the long term future of the Breckenridge area.
Vail Resorts: The operator of Vail, Breckenridge, Beaver Creek, Keystone, Park City, The Canyons and Heavenly Valley just to name a few, is the acknowledged leader in both ski mountain operations and resort real estate development. Given the mature and consolidating nature of the industry, VR’s long-running strategy of stripping market share from competitors via massive upgrades to their products, goods and services, is a proven success formula that will definitely continue. It is important to recognize that the economic engine driving most ski towns is not just the mountain and snowfall, but the successes or failures of the operating company in delivering unique and memorable getaway experiences. If the operator is vibrant, responsive, and delivers on its promise of superlative vacation fun, then demand increases and the community-at-large prospers. However, if that operator damages or dilutes the visitation experience as exemplified by the American Ski Company laying off 1100 employees at Steamboat Springs a decade ago, towns suffer and real estate values fall. Because VR is a well-capitalized, Fortune 1000, forward thinking company, we anticipate continuing success for Breckenridge as a Top 20 destination mountain resort. The days of being just a lift ticket are over with best of the best resorts transforming themselves into year around international destinations with limited fixed supply real estate that will become even more valuable in the years ahead.
Appreciation: Since 1991 the compounded average growth rate (CAGR) for Breckenridge ski proximate neighborhoods has been just under six percent (5.78%) as illustrated in the Investment Performance tab. Based upon data analyses this historic 25 trend line has finally resumed driven by Supply vs. Demand metrics. Breck’s ski proximate core is 99% developed and with the municipality surrounded by restricted Forest Service land, odds are that you can have fun and make money in this community if you know how to go about it. With the a new billion dollar Peak 7 & 8 base village redevelopment on its way towards completion, baby boomer demographics, an increasing concentration of wealth, a fantastic ski mountain with reliable snowpack, and a focus on expanding year around activities, Breckenridge is a real departure from most other mountain resorts and worthy of serious consideration.
Summary: Given our more than 60 years of industry experience, you can probably tell that we are extremely bullish about the future of this very special place and as always welcome your questions, comments and interest in becoming part of the fascinating transformation. Now is the time to take a closer look at this unique and not well understood combination of elements, while prices are still affordable and interest rates remain at unsustainable levels. If you are interested in learning more don’t hesitate to call us for more information and may this be the year when lifestyle enhancement and financial performance dreams come true.
